What Does "Estate" Mean?

The word “estate” can have several meanings depending on the context of how it is used.  These multiple meanings often cause confusion.

 To begin with, the word “estate” is used in the phrase “estate planning”.   In this context, the word “estate” means all of the money, property, assets, interests and things of value controlled by a person while alive.  Yet, estate planning is more than money.  It is people − family, loved ones − and providing for them.  It is federal and state taxes and how to minimize them.  It is the setting of goals and objectives regarding how money and property will be handled and distributed.  Thus, in this context, “estate” takes on a very broad meaning.

 Second, “estate” is used to refer to the probate process–the “probate estate”.  In this context, “estate” has a narrow meaning and usually refers only to those assets which are subject to probate–which are only those assets which were in the sole name (or ownership) of the deceased at the time of death and without any beneficiary designation.  Thus, assets held in joint tenancy and assets held in trust would not be considered part of the “probate estate”

 Third, when talking of taxes, “estate” is used to refer to the taxes imposed on the transfer of property at death–i.e. “estate taxes”.  In this context, “estate” has a very broad meaning since estate taxes apply to all property owned or controlled by the deceased at death, whether or not such property was included in the “probate estate”, controlled by beneficiary designation, held in a living trust, or owned in joint tenancy.  This tax concept is often called a “gross estate”.   Thus, for estate tax purposes, the word “estate” generally means the sum total of all items of monetary value such as bank accounts, brokerage accounts, real estate, interests in partnerships and LLC, stock and bonds, vehicles, jewelry, IRAs, 401(k) accounts, life insurance, tangible personal property, etc., which were held, owned or controlled by the deceased at death.

 Fourth, what really gets confusing is when the word “estate” is used in the context of a trust, since a probate “estate” and a “trust” are two separate and distinct entities.   Yet, sometimes the phrase “trust estate” is used.  In that context, “estate” has a narrow meaning and means only the property or assets subject to a specific trust.